Compliance

IRS Updates Procedures for Determination Letter Requests

Procedures for requesting determination letters were modified to reflect the elimination of the five-year remedial amendment cycles for individually designed plans.

By Rebecca Moore editors@plansponsor.com | February 08, 2017
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The Internal Revenue Service (IRS) has issued Revenue Procedure 2017-4 explaining how the IRS provides advice to taxpayers on issues under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division, Employee Plans Rulings and Agreements Office. It also details the types of advice available to taxpayers, and the manner in which such advice is requested and provided.

Procedures for requesting determination letters were modified to reflect the elimination of the five-year remedial amendment cycles for individually designed plans and other changes as described in section 4 of Rev. Proc. 2016–37. To the extent that employers that maintain individually designed plans may still request a determination letter under the third Cycle A, the procedures described in sections 6 and 7 of Rev. Proc. 2016–6 continue to apply.

Rev. Proc. 2016-37 says a plan can request a determination letter only if any of these apply:

  • It has never received a letter before;
  • The plan is terminating; or
  • The IRS makes a special exception. IRS anticipates making exceptions based on program capacity to work on additional applications, and the need for rulings in certain areas. The agency said it will measure need in a variety of ways including annual input from the Employee Plans (EP) community.

In Rev. Proc. 2017-4 the IRS says procedures for requesting determination letters were modified to reflect that employers may request determination letters on whether covered employees are leased employees only to the extent the employer is otherwise eligible to apply for a determination letter under Rev. Proc. 2016–37.

Procedures for requesting determination letters were modified to reflect that employers that maintain individually designed plans may no longer request determination letters on whether a plan sponsor is part of an affiliated service group.

Procedures for requesting a minimum funding waiver, as described in section 3 of Rev. Proc. 2004–15, 2004–1 C.B. 490, have been modified to eliminate the alternative of requesting a determination letter in conjunction with a minimum funding waiver request. Requests for minimum funding waivers may still be submitted to the Office of Associate Chief Counsel (Tax Exempt and Government Entities) as requests for private letter rulings. See section 5.15(2) of Rev. Proc. 2017–1.

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